DirecTV Cancels Merger Deal With Dish

DirecTV has terminated its proposed merger with Dish, a deal that would have created one of the largest pay-TV distributors in the US with a combined 20 million subscribers, CNN reported.

As part of the agreement, DirecTV planned to pay $1 to acquire Dish DBS — including Dish and Sling TV — while assuming $9.75 billion of Dish’s debt. I Photo: Mark Sardella Flickr

For the merger to proceed, Dish bondholders were required to exchange their debt for new debt in the merged entity at a discounted rate, amounting to a $1.57-billion “haircut.” As part of the agreement, DirecTV planned to pay $1 to acquire Dish DBS — including Dish and Sling TV — while assuming $9.75 billion of Dish’s debt.

“We have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” said Bill Morrow, CEO of DirecTV.

The termination became effective Friday. EchoStar, Dish’s parent company, has yet to comment on the decision.

The proposed merger, announced in September, was seen as a strategic response to a shrinking pay-TV market. EchoStar reportedly carries over $20 billion in debt, which may have influenced the deal’s collapse.